Rates On Savings Accounts And CDs Are Up. Should I Move My Deposits? (2024)

Technology companies including Apple and Robinhood have launched and are heavily promoting new savings accounts with hefty yields exceeding 4%—returns that are nearly impossible to resist when many traditional banks are still offering chump change on standard savings accounts.

But the tides are shifting. Many banks have ramped up their annual percentage yields (APYs) on savings accounts and certificates of deposit (CDs) to keep their customers loyal in a highly competitive landscape—one in which the recent collapses of Silicon Valley Bank and First Republic Bank have consumers questioning their reliance on traditional banking.

Banks and fintech companies hope sweetening the interest on savings will be enough to attract or hold onto nervous depositors.

But before you start opening new accounts and moving your cash around, there are a few steps to ensure you make the right move—and a smooth one—when chasing yields.

Annual percentage yields (APYs) and account details are accurate as of Sept. 25, 2023.

Why Rates Are Going Up on Savings Accounts and CDs

Several factors are driving savings rates higher. One of the biggest is rising inflation, which has caused the Federal Reserve to raise its benchmark rate nine times since last year, through March 2023.

Higher Fed rates have nudged banks to raise their rates for depositors. The best high-yield savings accounts are now paying up to 5.00% APY, though the FDIC reports the national average rate is still pretty low, at 0.39%.

In times of rising prices, big yields are a must, particularly on CDs, which lock in your money for a set period of time, like six months or three years. Though the average APY on a one-year CD was 1.54% in mid-April, according to the FDIC, some of the best CD rates are now 4% to 5%—levels that haven’t been seen since 2006, before the financial crisis that led to the Great Recession.

In recent months, online financial companies have been offering higher-yielding no-fee savings accounts, which, unlike CDs, don’t require you to lock away your cash. The trend ramped up in March after the widely publicized collapses of Silicon Valley Bank and Signature Bank alarmed consumers.

To attract restless depositors, Apple launched a new savings account, its Apple High-Yield Savings Account, on April 17 through Goldman Sachs with a 4.50% APY for Apple Card users. The announcement followed similar moves from the app-based firms Webull, which in March launched the Webull Cash Management Account that offers a 4.10% APY, and Robinhood, which announced an increased APY for Gold members of the Robinhood Brokerage Cash Sweep program in December.

Should I Move My Deposits Now?

If you have extra cash sitting in an account that you won’t need for a large purchase anytime soon, and you don’t mind the hassle of moving funds around, then now could be a good time to move your money into a high-yield account.

Some traditional banks have started offering CD promotions with attractive yields. For example, Chase Bank Certificates of Deposit have a three-month CD paying 2.00% APY, depending on your ZIP code. (The rate is available in 10001 and many others, though not nationwide.) But the minimum account balance is a whopping $100,000. A number of purely online banks offer high-yield savings accounts with no fees or balance requirements.

If you’re interested, it’s best not to wait. High promotional rates on CDs and savings accounts are often temporary attempts to attract new customers and longer-term business, so they don’t last long.

How To Move Deposits Around More Easily

Once you’ve decided to call it quits with the financial institution currently holding your savings, open a new account but don’t be quick to close the old one.

Switching banks in this way gives you time to track all the old account’s direct deposits and withdrawals so you can begin moving them over to the new one. You may need to contact your employer to reroute your direct deposit, which can take up to a few weeks, or tell the Social Security Administration to redirect your monthly payments.

You should also leave enough funds in your old account to make sure any automatic withdrawals for, say, utilities or cellphone payments are covered until the companies have changed over to your new account.

Once you’re certain all your automatic transfers have cleared and have been linked to the new account, you can close the old account.

“Get written confirmation that the account has been closed,” advises the U.S. Consumer Financial Protection Bureau.

If you are simply moving a portion of your savings from one account to another at a different institution, automatic bill pay is less of a concern. But you’ll still want to check the minimum balance requirements for both your new and old accounts so you don’t mistakenly dip below the required minimums and incur fines.

When You Shouldn’t Move Your Deposits

If you’re happy with your current financial institution and you know your account balance is fully insured by the FDIC, then the hassle of changing accounts—along with updating details for any automatic withdrawals and deposits—may not be worth it for you.

It’s also not a great time to move your money if you’re about to make a large financial purchase or apply for a loan, like a mortgage. The mortgage lender will usually ask for your bank account statements, among other financial documents, from application to close.

If you start opening new accounts and shifting funds, the lender will ask for statements from both the previous and new accounts. That makes more work for you and the lender at a time when you want the process to be as smooth as possible, so you can close on schedule.

Also, if you’re not the kind of person who likes to watch or manage multiple accounts, opening more in pursuit of higher yields might not be appealing. That said, if you have money just sitting in an account that earns little to no interest, the current competitive climate makes it worth shopping around.